‘Solopreneur’ is a somewhat new term that is derived from ‘solo entrepreneur,’ i.e. a person who conducts business solo. The concept is fundamentally different from that of a ‘freelancer’ which is a term everyone understands these days.
Basically, a solopreneur is the one-person version of a full-bred entrepreneur. Solopreneurship is the “level-up” phase of freelancing.
Perhaps scalability and the growth rate of the business are the biggest differences between solopreneurs and entrepreneurs. For instance, an entrepreneur might seek external funding from investors whereas a solopreneur would mostly rely on the profits of the business to try out new tracks of businesses.
But what you didn’t perhaps know is what all the properties of a solopreneur that a freelancer doesn’t possess actually are. There are 10 factors that set solopreneurs apart from freelancers, and it is indeed those factors that make solopreneurs run bigger businesses.
Below is my explanation of the differences, freelancer vs. solopreneur, based on my own process of transition from the first to the latter, and a description of similar experiences from a couple of my online friends on LinkedIn.
To me, the whole thing happened years ago and purely because of the needs of a client project that forced me to expand my current model of working. And that model stuck in my mind for good! 😉
How freelancers and solopreneurs differ from entrepreneurs
But first of all, let’s clarify what is similar between a freelancer and a solopreneur.
The most obvious similarity is the size of the company, regardless of the official company form: one. And that means, when things go fine, it’s a constant party of one! 😀
Also, both freelancers and solopreneurs have a laser focus on their niche that they are unlikely to deviate very much. Entrepreneurs, on the other hand, might pivot the entire business to a very different type when the situation demands it.
Yet another similarity is the goal and ability to scale the business. There are plenty of great examples of one-person million-dollar businesses, although they are still rare. To entrepreneurs, in contrast, the revenue of a million bucks is still only a good start. More to come, soon. 😉
Another aspect that is identical in freelancers and solopreneurs but very different in entrepreneurs is brand. Entrepreneurs tend to build companies and their brands, and the continuity of that brand is the big thing whereas those going solo rely on their personal brands.
You can easily guess if a good personal brand is easier, faster, and cheaper to create for an individual than creating a whole corporate identity from scratch by a dedicated branding and marketing group of a new company. Creating a brand is easier for individuals like freelancers and solopreneurs.
The truly big differences between a solopreneur and an entrepreneur are perhaps:
- Entrepreneurs don’t work alone (which becomes evident particularly in decision-making)
- Entrepreneurs rely on building in-house teams to execute the business while the solopreneur might only lead and manage it
- Entrepreneurs might seek external funding from investors to develop new business ideas
- Entrepreneurs have a clear exit plan (i.e. someone will buy the business and thus make the entrepreneur rich!)
In short, entrepreneurs are those who get others to do most of the work for them and sit on top of their self-made pyramid whereas freelancers and solopreneurs are very much still hands-on guys involved in the execution level of the business and do at least the most valuable part of the work themselves.
Freelancer vs. solopreneur: The 10 defining factors
There are ten big differences between freelancers and solopreneurs. The differences start from one’s role in the work delivered to the clients. Freelancers handle (almost) everything themselves, i.e. you are your own marketing team, salesman, operations manager, worker, bookkeeper, and accountant. Also, personal coach if you’re great at reflective thinking! 🙂
Solopreneurs understand that when the value of the work is high, the business runs more efficiently when many parts of the business process are outsourced to others. Typically, specialists in their respective fields. The most typical parts are perhaps administration-related tasks (e.g. bookkeeping and accounting) or heavily execution-focused tasks (e.g. manual testing in software development).
The following illustration describes the difference between freelancers and solopreneurs. And this works as a checklist for you too. How much a freelancer are you, and how much solopreneur? 0%, 25%, 100%…?
Freelancer vs. solopreneur, the major differences.
One of the most significant differentiators is the size of the work. Solopreneurs might be doing as big projects as agencies with in-house teams whereas freelancers typically execute chunks of work that match an individual’s workload only. Not always, but typically.
Freelancers are known to be stingy, and it is understandable in the case the business is not yet very profitable and there simply isn’t any excess to be used. Solopreneurs, on the other hand, have no problem using the money if the money can buy something valuable that improves the business.
This also means that solopreneurs are more fluent in managing costs… particularly the part accountants call Cost of Sales. Many freelancers I know don’t even know what that term means just because many of them don’t have to.
The aim for a cozy living while working for yourself is a common nominator, but the way to achieve it is different. Many freelancers hope to get regular work from repeat clients or sign long-term contracts to get some level of stability in their lives (and there’s absolutely nothing wrong with that!), but solopreneurs try to offer an ever-better service to their clients that is more and more valuable to them.
To solopreneurs, the stability comes from the increased value and the ease of earning top dollars. Freelancers may have multiple sources of income, but solopreneurs, as they are indeed entrepreneurs running a business, have the constant aim of creating new tracks of business within the core business. Not only to stay competitive but to claim a bigger share of the primary market or expand to other markets. Just like a big corporation but on a smaller scale.
This means in its simplicity that freelancers earn almost all of their income by trading their time for money, but solopreneurs have a wider array of income streams.
Obviously, this also means that on a personal level, freelancers are mainly interested in growing their skills, and undeniably that is what every solopreneur does too all the time. But solopreneurs have that business mindset and the primary aim is to grow that business consciously by taking strategic, planned steps of business development.
The last difference is behavior in general. Freelancers act as great individuals and professionals. Solopreneurs tend to identify themselves as businesses. They are the business.
When should you become a solopreneur?
There are two aspects that I think drive freelancers to become solopreneurs: success in running the freelance business or the need of it (business growth), and the need for improving the content of one’s work further (personal growth).
There could be other factors as well, but I would claim that when both of those happen at the same time, most people revisit their processes and start thinking to level up their freelance businesses.
Business growth
The first part is very obvious. When the business is good, you’re making money, and you are left with plenty of extra, you start to worry less about spending some dozens, then hundreds, and then thousands of dollars as you see those amounts being a mere 1% of your income. Simply put, when you make more, you tend to spend more.
Or it’s the other way round. It’s the need for bigger success that drives business growth.
When your freelancing is going OK, you may want to level up deliberately. You just realize, that to stay in the same mode of freelancing may not bring a satisfactory amount of cash in the long term, so you have to improve your business to stay on top of your game and claim a bigger slice of the cake of your niche.
The business growth alone drives many freelancers into solopreneurship either from the need perspective or because of the excess.
To many, it starts with the need to beat the competition, a very practical need. When we talked about our experiences of being fresh freelancers and so-called “business idiots” many of my LinkedIn friends reported having this experience. (I’ve started to use this term a lot since I wrote the original article, somehow… I guess it’s good for starting provocative conversations!)
For example, David Potter, an independent software developer based out of Saint Louis, Missouri, and the sole owner of David Potter Studio LLC, shares the same philosophy of solopreneurship with me: be a big fish in a small pond. It means that you aim to practically own your niche in your market in a way that almost all opportunities land on your desk first before clients start looking for other options among your competitors. (But it doesn’t mean you need to stay in the same pond all the time as you can shift your niche slightly many times over like I have. This is evident in my Upwork project history.)
David Potter’s experience and approach are identical to mine: become a big fish in a small pond by purchasing the best tools available no matter the cost.
Getting there, becoming that big fish, requires several things, of course. You need to have great skill and the ability to create a good reputation, but perhaps the most obvious first step to a freelancer is the use of the first extra bucks for upgrading your tools from normal free-to-use things to paid pro-level things.
To David, it was the best marketing tools money could buy that he acquired and used for differentiating himself from “normal” developers who don’t know anything about marketing. That’s a great way to beat your competitors!
In my case, it was a Dropbox Plus subscription which at first felt like a big cost of a whopping hundred bucks! But once I made that purchase and realized what huge benefits I got from it (i.e. virtually unlimited storage space for archiving all projects with backups), I never considered stopping the subscription.
That tiny improvement in organizing and storing my files and sharing some of them with my clients was the first step for me to use my money for improving my operation. Later on, I increased the spending on many other things.
Personal growth
The internal need to improve yourself is the other main driver besides business growth.
It seems natural to think of yourself when you realize that your freelance work starts to repeat itself and your process of continuous learning is limited by that repetition. New learning opportunities regarding your core skill don’t emerge anymore as you’re close to being as good as you can get. Your performance is already at its peak. You’re a true expert.
At that moment, the only area to learn more is the business side of things. What more than your time could you give to your clients whose businesses you have come to understand extremely well over the years of freelancing?
You start thinking about their businesses in a more holistic way, not from the little keyhole perspective you might have had as a freelancer. Many ideas for products start coming to your mind and given the success of your business so far, you realize you have the opportunity and the resources to develop something bigger.
Product development is so fundamentally different from a freelancing service that it will most definitely teach you new skills. And even if product development was what you did as a freelancer, you’d still have a good chance of expanding your skills when trying to market and sell the product yourself.
Alternatively, you remember the earlier version of yourself and reflect on what you’ve learned so far which leads to developing something helpful for other people just like you but at an earlier career stage of freelancing. Since, at this point, you have all the experience of making your freelance business successful, you have the opportunity to help others achieve the same.
This kind of need for personal growth is the birth story of CoachLancer, in case you didn’t guess it yet. 🙂
And many are in the process of figuring their path right now.
To Precious Akilapa, a copywriter/content writer from Akure, Nigeria, and one of those who have managed to start strong on Upwork on their own, it was all about seeing the bigger picture of the whole thing he calls “career freelancing” which is the complete opposite that “business idiot.”
Precious Akilapa is in the process of leveling up his freelancing.
This kind of progress is natural and it happens gradually over several years in many freelancers’ lives.
When you master your trade, your freelance operation is fully smoothened and polished, you have become a dominant player in your niche market, the money comes without breaking a sweat, getting daily coconuts can be taken for granted, and your excess funds appear to be lying around, you have an internal need to progress somehow. Be even better.
At that point, it is very natural to start to use those excess funds as you realize there is potential to improve the business by spending some money. And if it completely fails… well, you lost some pennies, yes, but probably learned something new that helps you later on.
Trying and learning new things is what solopreneurs love to do. Just like true entrepreneurs.
Case study: My transition from freelance to solopreneurship
What happened to me soon after I understood that the Dropbox Plus subscription was a really good use of my money was similar to both Precious and David. But my process followed a very different path.
First I went on to develop products and then do bigger projects, and thus I got a permanent solopreneur stamp on my forehead.
The product development track
Unlike most freelancers, probably because I am a software developer by training and just before turning freelance a hands-on CTO who built a complete product, I started product development right from the start. It didn’t go too well, but I have kept that product development track in mind nonetheless.
A couple of years later, I started developing products for a niche market that I knew really well through my clients. I saw a pattern in what kinds of projects they were buying from me and what of them could be turned into a product.
As I can always make yet another product, my problem was in business development. I must have spent thousands of dollars on external resources to get the product done and sold, but I hit a stuck point soon in my own ability to connect with large enough amount of the right kinds of customers in an efficient enough way.
My conclusion on that venture was that I hadn’t calculated the cost of marketing and doing sales anywhere near correctly! So, without ever launching anything big, I put the project permanently on hold to wait for the day when connecting with and selling to enough clients wouldn’t cost me that much… or that I would think of a much less costly way of doing sales e.g. via a sales partner network.
The project is on hold until I figure out a much more efficient way to sell that damn thing. 🙂
Bigger projects
Doing bigger projects came quite naturally in less than two years from the start of my freelancing career.
But unlike most solopreneurs, I even had an urgent need to hire a person to work in my home/coconut office on a part-time basis as I realized I had taken a big project and developed a piece of software that required a lot of repetitive testing.
As I was dealing with technologies that do not support automated testing in any practical and useful way (Microsoft Kinect where the user uses her body to control the software), I had no choice but to get someone else for the job.
I had built an experimental prototype for my client in Silicon Valley with the aim of developing a solid patent application. Now, that prototype had to be turned into a fully functional sellable product!
For the sake of speed, there were lots of shortcuts I had taken to demonstrate different capabilities of the system to my client with biweekly releases, but now we had a clear idea of the product scope and we had to fill in all the gaps in the prototype to make the product complete. That required a lot of manual testing, there was no other way.
I considered hiring someone via some of the freelance sites, but then I realized it would not be efficient for communication parts. In case my tester found a problem, how would I understand what exactly it was unless I was standing right next to him? I couldn’t imagine a more efficient way than hiring a local guy to help me.
Hiring someone in Malaysia to come to my home office 2-3 times a week was a perfect arrangement and absolutely worth the money. I was happily paying the 15% employment overhead costs that are mandatory for all employers around here.
That hire saved my face in front of my client as without the tester I would have taken too long a time to stabilize the software purely on my own. (Also, my brain is a poor fit with repetitive work in general.)
And after that project, my hire helped me in all other testing tasks that saved me an incredible amount of time for other things. It was brilliant until he found a full-time job.
That was the first clear scale-up for me. Later on, in terms of doing bigger projects, I’ve gone as far as developing a 5-player virtual reality (VR) game production for a new VR arcade where I needed ten other freelancers to get the job done:
- 3D animators (3)
- 3D modelers (2)
- Multi-player VR game tester
- Voice actors (2; different languages)
- Translators (2)
What was left for me was:
- Game design in collaboration with the client
- Script-writing for voice actors
- Software architecting
- Software development (down to every single code line)
- Testing iterations with the client at the client’s location
- Installation at the client’s location
- Project management
- (Sub)contracts management
- Logistics management (shipping of VR hardware and myself)
It was still a lot to take on my own shoulders, but running a thing this big still solo, sort of, was absolutely fantastic! The mode is no different from doing CTO-as-a-Service for startups. Juggle everything technical until the job is done! But now I was in the agency mode, sort of, and had more interfaces to people than in any previous project.
If it wasn’t for a rare VR development solopreneur like me, the only other option for my client would have been to hire a local VR game agency. Slower and more expensive, for sure. Also, less fun, I could claim. 😀
And the other alternative, an individual freelance developer, would not have all the necessary skills needed to put together an entire game production, that being a physical multi-player installation and all. A great programmer would not be able to write the scripts for voice actors and direct them or design the dynamics of a 5-player collaborative game, perhaps.
This is what it looked like at the client’s location when the arcade venue was still being built: Solopreneur in action as the only face of the 11-person production team (that the client never saw).
I don’t always take selfies, but when I do, they look at least this stupid! 🙂 A sneak shot from the VR game arcade under construction.
Going for big projects worth tens of thousands can be overwhelming at first when you realize that everything mentioned in the contract is your sole responsibility to get done and delivered. This is where strong project planning and project management skills are not only needed but a definite must. When you level up, you have a bigger responsibility too.
You have to take care of all the critical things including the schedule, compensation, and contracts of your hires and even logistics if you deal with physical products… all the way down to simple things like checking if all the necessary hardware are already available or should be purchased on the way.
My temporary workstation at the VR arcade.
One fantastic aspect of this project was the fact that although I always have rather high-end VR hardware in my home/coconut office, my client had no budget limit whatsoever for the hardware. I got to pick! So, of course, we had the most expensive stuff for me to play around with and optimize my software on!
One time when visiting the client, he missed his flight back home and wasn’t even there when I was. But he just texted me his door code and let me in remotely just like that to play with the most high-end VR devices I’ve ever got my hands on. In times like these, you don’t need to guess about the importance of your work to the client’s business! 🙂
PS: Working 10 am to 10 pm in a game arcade that is partially operational (groups of people playing noisy VR shooting games while I was developing mine) counts as a high-pressure environment. 🙂 Fortunately, my visits were only about 3-4 days long as most of the development could be done remotely.
Your transition from a freelancer to a solopreneur?
Solopreneurship is not the only way, of course. It’s not about choosing a better path, the freelancer vs. solopreneur path. Some freelancers are perfectly happy staying as freelancers forever. There’s nothing wrong with that. It’s OK!
But those who level up start to see the world differently just like a true entrepreneur. New opportunities arise from unexpected sources, possibilities of doing new categories of things seem virtually infinite, resources you could use increase constantly, lightweight partnerships can be formed quickly, and so on.
If you one day realize that there is a little entrepreneur inside you, take conscious steps toward solopreneurship the very moment you get a hang of day-to-day freelancing. Level up quickly and become the best version of a business person you could be.
Expand your horizon.
All the best with your transition, should you choose to accept the challenge!
